We use dosage compensation in Drosophila as a model to understand how chromatin domains are created and maintained for precise control of gene expression. Dosage compensation increases transcriptional output from the single male X chromosome to balance X and autosomal gene expression in males (XY) as it is in females (XX). This is achieved by the MSL complex, which binds to active genes on the X chromosome, and acetylates histone H4 on Lys 16 within gene bodies. Initial targeting of the X occurs at sites of non-coding roX1 and roX2 RNA synthesis, and at ~250 chromatin entry sites through binding to 21 bp MSL recognition elements (MREs) that are enriched, but not exclusive to the X chromosome. A second, sequence-independent spreading step leads to binding of virtually all active genes on X in cis. Once bound to gene bodies, the MSL complex somehow increases transcriptional output approximately two-fold. In this proposal, we have developed three specific aims to address the most intriguing aspects of dosage compensation at a mechanistic level. In Aim 1, we ask how a simple sequence can function specifically on X to nucleate MSL spreading. In Aim 2, we ask when and how spreading to active genes occurs. In Aim 3, we ask how the MSL complex increases transcription of X linked genes. Our current approaches reflect the rapid changes in genomic analysis that have occurred in the field. We continue to utilize a model genetic approach, but we can now, for the first time, follow the manipulation of genotype with analysis of the resulting chromosomal and transcriptional phenotypes at very precise, sometimes base pair resolution. Success in these approaches should serve as a model for understanding how the genome is organized for the precise and coordinate regulation of gene expression.